Some big ifs hang over trade recovery
Time to put out some good news on Asia's fortunes in foreign trade; very preliminary of course, but, when you wonder how far down the bottom is, any sign that it is near has to be welcome.
The chart certainly suggests that the bottom has been reached. With seven countries so far reporting export figures for January, and these seven account for about 86 per cent of the total, the year-on-year growth rate of exports now registers a negative figure of 9.9 per cent on a three-month average basis.
This would not normally be considered encouraging news except that the same figure in September was a negative 15.3 per cent. Judging by past trends, that line in the chart should now continue moving up.
It is a very preliminary indicator, however. The actual raw numbers for the dollar value of Asian exports are still dropping like a rock and that improvement in year-over-year change is due largely to what is called the base effect - exports were so far down a year ago that comparison makes things look a touch better.
But if you take China out of the sample you get hardly any improvement at all in growth rates. As the table shows, China is the only Asian country to show real export growth. Everyone else is still in negative territory.
China's lead over the others is also growing fast. As just one example of this, Japan is still a larger exporter with US$29.4 billion monthly on a three-month average basis compared with China's US$23.4 billion. It was only in mid-2000, however, that Japan's exports were twice as great as China's. Another year of this trend and China will outstrip Japan.
Things look bleaker on the home front. Hong Kong's domestic exports show no sign of recovery. Nor does it really matter. We have long ceased to be dependent on domestic exports. They were the equivalent of 50 per cent of the size of our economy only 14 years ago but that figure is now barely 10 per cent.
In fact, even this figure is the result only of lingering international quota protection for the rag trade. Textiles and clothing now account for more than half of domestic exports and that figure is rising fast, not because rag exports are growing but because everything else is in the middle of a vanishing act.
So what. The trade figures that really matter to us are those booming ones from China. It is on these that we base our service exports, now much more important than our own goods shipments.
Just look at that table again - a plus 16 per cent figure for China and the nearest to it is a negative 11.4 for Taiwan. It is encouraging trade news for us.
But it probably is best to continue treating signs of improvement elsewhere as preliminary. If it is true the United States is recovering from recession, if European demand also picks up and if China does not swallow all that improvement for its own manufacturing plants, then trade recovery for the rest of Asia is a fair bet. Those are still big 'ifs', however.